-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vrq78yBmS6LUfXk6zj+Lkpp7LifMVjXipv+1E+qMQhWOXnFgEPCoSxJrSkkSRzxh nREgn5uz7nnm9PrYT8qwQQ== 0000950149-96-000371.txt : 19960410 0000950149-96-000371.hdr.sgml : 19960410 ACCESSION NUMBER: 0000950149-96-000371 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960516 FILED AS OF DATE: 19960408 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEDFORD PROPERTY INVESTORS INC/MD CENTRAL INDEX KEY: 0000910079 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 680306514 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12222 FILM NUMBER: 96545205 BUSINESS ADDRESS: STREET 1: 270 LAFAYETTE CIRCLE STREET 2: P. O. BOX 1058 CITY: LAFAYETTE STATE: CA ZIP: 94549 BUSINESS PHONE: 510-283-8910 PRE 14A 1 NOTICE & PROXY STATEMENT/MEETING DATE 05/16/96 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: /X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6 (e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 Bedford Property Investors, Inc. - -------------------------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) - -------------------------------------------------------------------------------- Payment of filing fee (Check the appropriate box): /X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3) / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: - -------------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: - -------------------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee was calculated and state how it was determined): - -------------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: - -------------------------------------------------------------------------------- (5) Total fee paid: - -------------------------------------------------------------------------------- / / Fee paid previously with preliminary materials. - -------------------------------------------------------------------------------- / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: - -------------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: - -------------------------------------------------------------------------------- 2 (3) Filing Party: - -------------------------------------------------------------------------------- (4) Date Filed: - -------------------------------------------------------------------------------- 3 [BEDFORD LETTERHEAD] Dear Stockholder: The directors and officers join me in extending to you a cordial invitation to attend our Annual Meeting of Stockholders. This meeting will be held on Thursday, May 16, 1996 at 1:00 p.m. at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette, California. Enclosed please find the Notice of Meeting, Proxy Statement, and one of two separate Proxy Cards, one to be used by Common Stockholders and the other to be used by Preferred Stockholders. At this Meeting we are seeking to elect seven directors, two of whom will be elected by the Preferred Stockholders, voting separately as a single class, and five of whom will be elected by the Common Stockholders, voting separately as a single class. In addition, the Common Stockholders will also be asked to approve amendments to the Company's 1992 Directors' Stock Option Plan to (i) increase the number of shares reserved for issuance thereunder from 250,000 to 500,000 and (ii) change the maximum expiration date of options granted thereunder from five to ten years and to ratify the appointment of KPMG Peat Marwick LLP as the Company's independent public accountants for the upcoming year. Your management and Board of Directors unanimously recommend that you vote FOR all nominees for directors and FOR the other proposals. Please take time to review and vote on each proposal. Your vote is important. Please remember to return your Proxy Card. I hope to see you at the Annual Meeting. Very truly yours, Peter B. Bedford Chairman of the Board and Chief Executive Officer 4 BEDFORD PROPERTY INVESTORS, INC. 270 LAFAYETTE CIRCLE LAFAYETTE, CA 94549 - -------------------------------------------------------------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 16, 1996 - -------------------------------------------------------------------------------- TO THE STOCKHOLDERS: The Annual Meeting of Stockholders of Bedford Property Investors, Inc., a Maryland corporation (the "Company"), will be held at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette, California, on Thursday, May 16, 1996 at 1:00 p.m. local time, to consider the following proposals: 1. Election of five directors by the holders of the Common Stock for the ensuing year (the "Common Stock Directors"); 2. Election of two directors by the holders of the Preferred Stock for the ensuing year (the "Preferred Stock Directors"); 3. To approve amendments to the Company's 1992 Directors' Stock Option Plan to (i) increase the number of shares reserved for issuance thereunder from 250,000 to 500,000 and (ii) change the maximum expiration date of options granted thereunder from five to ten years; 4. To ratify the appointment by the Board of Directors of the Company's independent public accountants for the year ending December 31, 1996; and 5. To transact such other business as may properly come before the meeting. Only stockholders of record at the close of business on April 12, 1996 are entitled to notice of and to vote at the meeting and any adjournment thereof. STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. THE PRESENCE AT THE MEETING, IN PERSON OR BY PROXY, OF HOLDERS OF A MAJORITY OF SHARES OF STOCK ISSUED AND OUTSTANDING AND ENTITLED TO VOTE AT THE MEETING SHALL CONSTITUTE A QUORUM. THIS PROXY STATEMENT IS ACCOMPANIED BY ONE OF TWO FORMS OF PROXY CARD: ONE CARD FOR USE BY THE HOLDERS OF THE COMPANY'S COMMON STOCK AND THE OTHER CARD FOR USE BY THE HOLDERS OF THE COMPANY'S PREFERRED STOCK. IF YOU CANNOT ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE. By Order of the Board of Directors JENNIFER I. MORI Secretary April , 1996 Lafayette, California 5 BEDFORD PROPERTY INVESTORS, INC. 270 LAFAYETTE CIRCLE LAFAYETTE, CA 94549 --------------------------- PROXY STATEMENT --------------------------- MAY 16, 1996 ANNUAL MEETING OF STOCKHOLDERS INTRODUCTION ------------ This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (the "Board of Directors" or the "Board") of Bedford Property Investors, Inc., a Maryland corporation (the "Company"), of proxies from the holders (the "Common Stockholders") of the Company's issued and outstanding shares of Common Stock, par value $.02 per share (the "Common Stock"), and from the holders (the "Preferred Stockholders" and, collectively with the Common Stockholders, the "Stockholders") of the Company's Series A Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock"), to be exercised at the Annual Meeting of Stockholders to be held on Thursday, May 16, 1996, at 1:00 p.m., local time, and at any adjournment(s) or postponement(s) of such meeting (the "Annual Meeting"), for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. Unless otherwise indicated, all information contained in this Proxy Statement, including, but not limited to, Common Stock share numbers, share prices and per share amounts, reflects a one-for-two reverse stock split of the Common Stock effected on March 29, 1996. The purpose of the Annual Meeting is to consider and act upon the following proposals: 1. Election of five directors by the holders of the Common Stock for the ensuing year (the "Common Stock Directors"); 2. Election of two directors by the holders of the Preferred Stock for the ensuing year (the "Preferred Stock Directors"); 3. To approve amendments to the Company's 1992 Directors' Stock Option Plan (the "1992 Directors' Stock Option Plan") to (i) increase the number of shares reserved for issuance thereunder from 250,000 to 500,000 and (ii) change the maximum expiration date of options granted thereunder from five to ten years; 4. To ratify the appointment by the Board of Directors of the Company's independent public accountants for the year ending December 31, 1996; and 6 2 5. To transact such other business as may properly be brought before the Annual Meeting and any postponements or adjournments thereof. This Proxy Statement and the enclosed Proxy Card are being mailed to the Stockholders on or about April , 1996. The holders of record of the shares of Common Stock at the close of business on April 12, 1996 (the "Record Date") are entitled to notice of and to vote at the Annual Meeting in relation to proposals 1, 3 and 4, above, on which they will vote as a class. The holders of record of Preferred Stock at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting only in relation to proposal 2, on which they will vote as a separate class. At the close of business on the Record Date, shares of Common Stock and 8,333,334 shares of Preferred Stock were outstanding, each of which is entitled to cast one vote (collectively, the Common Stock and Preferred Stock are referred to herein as the "Outstanding Stock"). The presence at the Annual Meeting, in person or by proxy, of Stockholders holding shares entitled to cast a majority for each proposal of all the votes entitled to be cast at the Annual Meeting shall constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes (i.e., votes not cast by a broker or other record holder in "street" or nominee name solely because such record holder does not have discretionary authority to vote on the matter) will be counted toward the presence of a quorum. The Common Stock Directors will be elected by a favorable vote of a plurality of the shares of Common Stock present and entitled to vote, in person or by proxy, at the Annual Meeting. Similarly, the Preferred Stock Directors will be elected by a favorable vote of a plurality of the shares of Preferred Stock voted at the Annual Meeting. Accordingly, abstentions or broker non-votes as to the election of directors will not affect the election of the candidates receiving the plurality of votes. All of the other proposals to come before the Annual Meeting require the affirmative vote of a majority of shares of the Common Stock held by Common Stockholders who are present or represented by proxy at the Annual Meeting. Abstentions as to one or more of such proposals will have the same effect as votes against such proposal. Broker non-votes, however, will be treated as unvoted for purposes of determining approval of such proposals and will not be counted as votes for or against such proposals. Under the Maryland General Corporation Law ("MGCL"), holders of shares of Outstanding Stock will not be entitled to appraisal rights with respect to such shares with respect to any of the proposals. All expenses in connection with the solicitation of proxies will be borne by the Company. In addition to solicitation by mail, officers and directors of the Company may also solicit proxies by mail, telephone, facsimile or in person. Additionally, the Company may retain the services of a professional proxy solicitation firm to assist in the solicitation of proxies, at a cost of approximately $5,000 plus expenses, which would be borne by the Company. This proxy statement is accompanied by one of two forms of proxy card: one card is for use by the Common Stockholders and the other card is for use by the Preferred Stockholders. The shares of Common Stock represented by properly executed Common Stock proxy cards will be voted at the Annual Meeting as indicated or, if no instruction is given, in favor of proposals 1, 3 and 4. The shares of outstanding Preferred Stock represented by all properly executed Preferred Stock proxy cards will be voted at the 7 3 Annual Meeting as indicated or, if no instruction is given, in favor of proposal 2. The Company does not presently know of any other business which may come before the Annual Meeting. Any person giving a proxy has the right to revoke it at any time before it is exercised (a) by filing with the Secretary of the Company a duly signed revocation or proxy bearing a later date or (b) by voting in person at the Annual Meeting. 8 4 PROPOSAL 1 ELECTION OF COMMON STOCK DIRECTORS The Company's Charter provides that the Preferred Stockholders have the right, subject to expansion in certain situations, to elect two members of the Board of Directors annually and that the Common Stockholders have the right to elect the remaining directors. The Company's Board of Directors is currently composed of seven members. Accordingly, the Common Stockholders, voting as a class, have the right to elect five members to the Board of Directors to serve until the next annual meeting of Stockholders and until their respective successors are duly elected and qualified. The Board of Directors has nominated the five individuals set forth below to serve as directors of the Company. Management knows of no reason why any of these nominees would be unable or unwilling to serve, but if any nominee should be unable or unwilling to serve, the Common Stock proxies will be voted for the election of such other persons for the office of director as management may recommend in the place of such nominee. THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE "FOR" THE FIVE NOMINEES LISTED BELOW.
Name Age Business Experience During Past Five Years Director Since - ---- --- ------------------------------------------ -------------- Claude M. Ballard 65 Mr. Ballard is a Trustee of The Urban Land 1992 Institute, and a Limited Partner of the Goldman Sachs Group, L.P. Mr. Ballard also serves on the Board of Directors of CBL & Associates, a REIT, and Taubman Centers, Inc., a REIT. He is also a Trustee of Mutual Life Insurance Company of New York, the Chairman of Merit Equity Partners, Inc., a property acquisition and management company, and a Director of Horizon Hotels, Inc., a hotel ownership and management company. Mr. Ballard attended Memphis State University and the University of Tennessee.
9 5
Name Age Business Experience During Past Five Years Director Since - ---- --- ------------------------------------------ -------------- Peter B. Bedford 58 Mr. Bedford has been Chairman of the Board since 1991 May 1992 and Chief Executive Officer since November 1992. Mr. Bedford has been engaged in the commercial real estate business, primarily in the Western United States, for over 30 years and has been responsible for the acquisition, ownership, development and management of an aggregate of approximately 18 million square feet of industrial, office and retail properties, as well as land in 14 states, primarily as founder and President of Bedford Property Holdings Limited ("BPHL"), a privately- held diversified real estate holding company. Mr. Bedford is the sole stockholder of BPHL. Mr. Bedford serves on the board of directors of BankAmerica Corporation, Bixby Ranch Company, a real estate investment company, and First American Title Guarantee Co., a title insurance company. Mr. Bedford received his B.A. in Economics from Stanford University. Anthony M. Downs 64 Mr. Downs is a Senior Fellow at the Brookings 1992 Institution, a non-profit policy research organization, and is a consultant to Salomon Brothers Inc, Aetna Realty Investors, the real estate investment subsidiary of Aetna Life and Casualty Company, and the Federal National Mortgage Association. Mr. Downs serves on the Board of Directors of each of Pittway Corporation, a holding company with equity interests in publishing and manufacturing entities, General Growth Properties, Inc., a REIT, Massachusetts Mutual Life Insurance Co., the Urban Institute, the NAACP Legal Educational Defense Fund, Inc. and the National Housing Partnership Foundation, a developer of low-income housing. Mr. Downs received a B.A. in International Relations and Political Theory from Carlton College and an M.A. and Ph.D. in Economics from Stanford University.
10 6
Name Age Business Experience During Past Five Years Director Since - ---- --- ------------------------------------------ -------------- Anthony M. Frank 64 Mr. Frank served as Postmaster General of the 1992 United States from 1988 to 1992 and as Chairman and Chief Executive Officer of First Nationwide Bank from 1971 to 1988. Prior to that time, he was Chairman of the Federal Home Loan Bank of San Francisco, Chairman of the California Housing Finance Agency, Chairman of the Independent Bancorp of Arizona, and the first Chairman of the Federal Home Loan Mortgage Corporation Advisory Board. Currently, he is Chairman of Acrogen, Inc., a biotechnology company, consultant/director of TransAmerica HomeFirst, a residential mortgage company, and serves on the Board of Directors of each of Crescent Real Estate Equities, a REIT, Security Assurance, a municipal bond insurer, Irvine Apartment Communities, a REIT, Charles Schwab & Co., a brokerage firm, Temple-Inland, Inc., a forest products company, General American Investors Company, Inc., a publicly-traded closed-end investment fund, Living Centers of America, Inc., a company engaged in the operation of long-term health care centers, and Cotelligent, Inc., a temporary services company. Mr. Frank received a B.A. from Dartmouth College and an M.B.A. from the Tuck School of Business at Dartmouth. Martin I. Zankel, Esq. 61 Mr. Zankel is the Senior Partner of the law firm of 1992 Bartko, Zankel, Tarrant & Miller. Mr. Zankel was Chairman of the Board of Directors, Chief Executive Officer and President of Landsing Pacific Fund, Inc., a REIT. Mr. Zankel received a B.S. from the University of Pennsylvania, The Wharton School of Commerce and Finance, and a J.D. from University of California, Hastings College of the Law.
11 7 COMPENSATION OF DIRECTORS Members of the Board of Directors who are not employees of the Company are currently paid an annual retainer fee of $12,500 and an additional fee of $2,500 for each Board meeting attended. Any Director attending in person a duly constituted meeting of a committee of the Board of Directors of which such Director is a member receives, in addition to any other fees to which he or she may be entitled, a separate meeting attendance fee equal to $2,500 for his or her attendance in person at any such committee meeting not held on the same day, the day preceding or the day following a regular or special meeting of the Board of Directors. Any member of the Board of Directors who participates in a regular or special meeting of the Board of Directors by conference telephone or similar communications equipment receives $600 for each such meeting. Directors are reimbursed for out-of-pocket expenses in connection with attendance at meetings. If a member of the Board of Directors travels to conduct a site inspection of a property to be acquired by the Company, such Director is paid $1,000 per day and reimbursed for related travel expenses. Directors receive no other compensation for their services on behalf of the Company (except under the 1992 Directors' Stock Option Plan). See "Proposal 3 - Plan Description." COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS The Board of Directors held four regular meetings and one special meeting during 1995. Each member of the Board of Directors attended at least 75% of the aggregate number of meetings of the Board of Directors and the committees of which he was a member during the last year. The Company has an Audit Committee which consists of Messrs. Ballard (Chairman), Downs, Frank and Nolan. The Audit Committee reviews the internal controls of the Company and reviews the services performed and to be performed by the independent auditors of the Company during the year. The members of the Audit Committee also meet regularly with the independent auditors to review the quarterly financial statements of the Company and to review the scope and results of the annual audit. The Audit Committee met twice during 1995. The Company also has a Compensation Committee which consists of Messrs. Downs (Chairman), Frank, Eastman and Zankel. The Compensation Committee is responsible, with respect to stock options, for the administration of stock option plans of the Company, including the Employee Stock Option Plan and the 1992 Directors' Stock Option Plan. The Compensation Committee met three times during 1995. The Company also has a Nominating Committee which consists of Messrs. Frank (Chairman), Ballard, Eastman and Zankel. The Nominating Committee is responsible for submitting nominations for the various officers and for directors, elections for whom are held at the annual meeting of Stockholders. The Nominating Committee does not consider nominees proposed by Stockholders. The Nominating Committee did not hold a meeting in 1995. 12 8 Messrs. Eastman and Nolan were placed on the Board in September 1995 in connection with the sale of the Preferred Stock. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee during 1995 were Messrs. Downs, Frank, Eastman and Zankel. None of these individuals were officers or employees of the Company at any time during the year ended December 31, 1995, nor have any of these individuals ever been an officer of the Company or any of its subsidiaries. In addition, none of the executive officers of the Company served on the compensation committee of another entity or as a director of an entity which employs any of the members of the Compensation Committee. Martin I. Zankel, a director of the Company, and his associates provided legal services to the Company for which his firm was paid, in the aggregate, $52,000 in 1995. 13 9 PROPOSAL 2 ELECTION OF PREFERRED STOCK DIRECTORS The Company's Charter provides that the Preferred Stockholders, voting as a class, have the right, subject to expansion in certain situations, to elect two members of the Board of Directors annually, to serve until the next annual meeting of Stockholders and until their respective successors are duly elected and qualified. The Board of Directors has nominated the two individuals set forth below to serve as directors of the Company. Management knows of no reason why either of these nominees would be unable or unwilling to serve, but if either nominee should be unable or unwilling to serve, the Preferred Stock proxies will be voted for the election of such other persons for the office of director as management may recommend in the place of such nominee. THE BOARD OF DIRECTORS RECOMMENDS THAT THE PREFERRED STOCKHOLDERS VOTE "FOR" THE TWO NOMINEES LISTED BELOW.
Name Age Business Experience During Past Five Years Director Since - ---- --- ------------------------------------------- -------------- Thomas G. Eastman 49 Mr. Eastman is a founder and co-chairman of 1995 Aldrich Eastman Waltch, a national real estate investment adviser. He is a board member and former Chairman of the National Association of Real Estate Investment Managers. He is a Member of the Urban Land Institute and its Finance and Membership Committees. He is a Member of the Executive Committee of the Institutional Real Estate Clearinghouse. Mr. Eastman received a B.A. from Stanford University and an M.B.A. from Harvard University. Thomas H. Nolan, Jr. 38 Mr. Nolan serves on the Board of Directors of, and 1995 directs the management of commingled investment fund portfolios for, Aldrich Eastman Waltch, a national real estate investment adviser. Mr. Nolan joined Aldrich Eastman Waltch in 1984. Mr. Nolan serves on the Board of Directors of Crocker Realty Trust, Inc., a REIT, and the Partnership Committee of the Taubman Realty Group L.P. Mr. Nolan earned a B.B.A. in Business Administration from the University of Massachusetts.
14 10 PROPOSAL 3 ADOPTION OF AMENDMENTS TO THE 1992 DIRECTORS' STOCK OPTION PLAN On March 15, 1996, the Board of Directors unanimously adopted, subject to Common Stockholder approval, amendments to the 1992 Directors' Stock Option Plan (i) increasing the number of shares reserved for issuance thereunder from 250,000 to 500,000 and (ii) changing the maximum expiration date for options issued thereunder from five to ten years. The Common Stockholders are asked to approve the adoption of these amendments to the 1992 Directors' Stock Option Plan. DESCRIPTION OF THE PROPOSAL Currently, the 1992 Directors' Stock Option Plan provides that options to purchase a total of 250,000 shares of Common Stock may be issued thereunder with a maximum expiration date of five years from the date of the relevant grant. As of September 18, 1995, all of these options had been issued. The proposed amendments to the 1992 Directors' Stock Option Plan increase the number of shares available for issuance thereunder by 250,000 shares to a total of 500,000 shares and increase the maximum expiration date from five to ten years from the date of grant. The Board and management believe that these changes will serve to better align the interests of directors with those of the Stockholders and facilitate the retention and attraction of highly qualified directors by the Company. The 1992 Directors' Stock Option Plan was adopted in order to permit equity participation in the Company by its directors as consideration for their service on the Board and to provide an equity incentive associated with the success of the Company's business. Increasing the number of shares of Common Stock reserved under, and increasing the maximum term of options granted under, this plan would allow it to continue to fulfill these objectives. Both employee and non-employee directors of the Company are eligible to receive options under the 1992 Directors' Stock Option Plan. The following table shows, assuming that all of the nominees are elected at the Annual Meeting, the number of options which will be granted to the listed groups under the 1992 Directors' Stock Option Plan in 1996.
NUMBER OF OPTIONS(1) ----------------- Chief Executive Officer 5,000 All executive officers as a group 5,000 All directors who are not executive officers as a group 30,000 All employees (other than executive officers) as a group -0-
(1) The exercise price for each option is the fair market value of the Common Stock on the date of grant. THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE "FOR" THESE AMENDMENTS OF THE 1992 DIRECTORS' STOCK OPTION PLAN. 15 11 VOTE REQUIRED The affirmative vote of the holders of a majority of the shares of the Company's Common Stock present or represented at the Annual Meeting will be required to amend the 1992 Directors' Stock Option Plan. PLAN DESCRIPTION Under the Company's 1992 Directors' Stock Option Plan, members of the Board of Directors, whether or not employees of the Company, are eligible to receive grants of non-qualified stock options to purchase Common Stock. The aggregate number of shares of Common Stock reserved for issuance under the 1992 Directors' Stock Option Plan is currently 250,000. As of September 18, 1995, options to purchase all 250,000 shares of Common Stock reserved under this plan had been granted. The 1992 Directors' Stock Option Plan is administered by the Compensation Committee of the Board of Directors. Pursuant to the 1992 Directors' Stock Option Plan, each first-year director is granted an option for 25,000 shares of Common Stock effective on the date on which such person becomes a director, and an additional option for 5,000 shares on the date of each successive annual meeting, provided such director is re-elected to the Board. Each option granted under the 1992 Directors' Stock Option Plan has an exercise price equal to the fair market value of the underlying Common Stock on the date of grant. Payment of the option exercise price must be made in cash. On May 20, 1992, subject to subsequent approval of the 1992 Directors' Stock Option Plan by the Company's Stockholders, each of the five Common Stock Directors was granted an option for 25,000 shares of Common Stock at an exercise price of the then market price (as defined in the 1992 Directors' Stock Option Plan) of $5.33 per share. On June 9, 1993, each of the same five Directors was granted an additional option for 5,000 shares of Common Stock at the then market price of $7.712 per share. On May 18, 1994, each of the same five Directors was granted an additional option for 5,000 shares of Common Stock at the then market price of $12.966 per share. On September 13, 1995, each of the same five Directors was granted an additional option of 5,000 shares of Common Stock at the then market price of $11.816 per share. On September 18, 1995, 25,000 options were granted to the two Preferred Stock Directors at the then market price of $11.85 per share. This last grant exhausted the supply of Common Stock reserved for issuance under the 1992 Directors' Stock Option Plan. Options granted under the 1992 Directors' Stock Option Plan vest six months from the date of grant. The 1992 Directors' Stock Option Plan expires by its own terms in 2002. The maximum term of options granted under the 1992 Directors' Stock Option Plan is five years. If Proposal 3 is approved, the maximum term of options granted under the 1992 Directors' Stock Options Plan would be ten years. Approval of Proposal 3 would also have the effect of extending the maximum term of outstanding options by five years. As of March 18, 1996, all options granted under the 1992 Directors' Stock Option Plan were exercisable. As of March 29, 1996, no options granted under the 1992 Directors' Stock Option Plan had been exercised. As of March 29, 1996, the market value of the Common Stock underlying the outstanding options under the 1992 Directors' Stock Option Plan was $3,812,500, based on the closing price on the New York Stock Exchange of $15.25 per share. 16 12 If a director ceases to serve as a director of the Company, options outstanding under the 1992 Directors' Stock Option Plan may be exercised within three months after he or she ceases to serve as a director of the Company to the extent such options were exercisable on the date of termination. If a director ceases to serve on the Board of Directors due to a total and permanent disability, options outstanding under the 1992 Directors' Stock Option Plan may be exercised within 12 months after termination to the extent that such options were exercisable at the date of termination. If a director should die while serving on the Company's Board of Directors, options may be exercised at any time within 12 months after death, but only to the extent the options were exercisable at the date of death. An option granted under the 1992 Directors' Stock Option Plan is nontransferable by the holder otherwise than by will or the laws of descent or distribution, and is exercisable during the holder's lifetime only by the optionee, or in the event of the optionee's death, by the optionee's estate or by a person who acquires the right to exercise the option by bequest or inheritance. In the event any change is made in the Company's capitalization, such as a stock split or reverse stock split, appropriate adjustment will be made to the purchase price and the number of shares of Common Stock subject to each option. The Board may amend or terminate the 1992 Directors' Stock Option Plan from time to time in such respects as the Board may deem advisable; provided that, to the extent necessary to comply with Rule 16b- 3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any other successor law or regulation, the Company shall obtain Common Stockholder approval of any amendment to the 1992 Directors' Stock Option Plan in such a manner and to such a degree as is required by applicable law, rules or regulations. Any amendment or termination of the 1992 Directors' Stock Option Plan shall not affect options already granted and such options shall remain in full force and effect as if the 1992 Directors' Stock Option Plan had not been amended or terminated, without the director-optionee's consent. Any provisions of the 1992 Directors' Stock Option Plan that affect terms required to be specified in the Plan by Rule 16b-3 promulgated under the Exchange Act shall not be amended more than once every six months, other than as required by other applicable law, rules or regulations. FEDERAL TAX INFORMATION The following is only a summary of the effect of federal income tax consequences of transactions under the 1992 Directors' Stock Option Plan. This summary is not intended to be exhaustive, and does not discuss the tax consequences of a participant's death or the income tax laws of any municipality, state or foreign country in which an optionee may reside. Options granted under the 1992 Directors' Stock Option Plan are nonstatutory stock options. An optionee will not recognize any taxable income at the time he or she is granted a nonstatutory stock option. Upon exercise of the option, the optionee will generally recognize compensation income for federal tax purposes measured by the excess, if any, of the then fair market value of the shares over the option price. Upon resale of such shares by the optionee, any difference between the sales price and the exercise price, to the extent not recognized as compensation income as provided above, will be treated as capital gain or loss, and will qualify for long-term capital gain or loss treatment if the shares have been held for more than 17 13 one year. The Company will be entitled to a tax deduction in the amount and at the time that the optionee recognizes ordinary income with respect to shares acquired upon exercise of a nonstatutory option. 18 14 PROPOSAL 4 RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS KPMG Peat Marwick LLP, Certified Public Accountant, served as independent auditors of the Company for the fiscal year ended December 31, 1995. The Board of Directors, acting upon the recommendation of its audit committee, has appointed KPMG Peat Marwick LLP to audit the financial statements of the Company for the year ending December 31, 1996. A representative of KPMG Peat Marwick LLP is expected to be present at the Annual Meeting and will have the opportunity to make a statement if he so desires and will be available to respond to appropriate questions from Stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE COMPANY. 19 15 INFORMATION REGARDING EXECUTIVE OFFICERS EXECUTIVE OFFICERS OF THE COMPANY The following five persons serve as executive officers of the Company:
Name Age Business Experience During Past Five Years Officer Since - ---- --- ------------------------------------------ ------------- Peter B. Bedford 58 Mr. Bedford has been Chairman of the Board since 1992 May 1992 and Chief Executive Officer since November 1992. Mr. Bedford has been engaged in the commercial real estate business, primarily in the Western United States, for over 30 years and has been responsible for the acquisition, ownership, development and management of an aggregate of approximately 18 million square feet of industrial, office and retail properties, as well as land in 14 states, primarily as founder and President of Bedford Property Holdings Limited ("BPHL"), a privately-held diversified real estate holding company. Mr. Bedford is the sole stockholder of BPHL. Mr. Bedford serves on the board of directors of BankAmerica Corporation, Bixby Ranch Company, a real estate investment company, and First American Title Guarantee Co., a title insurance company. Mr. Bedford received his B.A. in Economics from Stanford University. Donald A. Lorenz 46 Mr. Lorenz became Executive Vice President of the 1994 Company in September 1994 and Chief Financial Officer in July 1995. Previously, Mr. Lorenz served as CEO of Tri-Ox, a manufacturing company, from 1993 to 1994. He served as Executive Vice President of BPHL from 1989 to 1994, the Managing Partner of Armstrong, Gilmour and Associates, a certified public accounting firm, from 1979 to 1989 and Audit Manager with KPMG Peat Marwick LLP from 1971 to 1978. Mr. Lorenz has been a certified public accountant since 1973. Mr. Lorenz received a B.S. in Business Administration from California State University - Hayward.
20 16
Name Age Business Experience During Past Five Years Officer Since - ---- --- ------------------------------------------ ------------- James R. Moore 55 Mr. Moore joined the Company as Vice President 1995 of Property/Asset Management in September 1995. From 1983 to 1994, he was Managing Director of the San Francisco office of Cushman and Wakefield, an international commercial real estate services firm. Mr. Moore was also a branch manager and commercial real estate broker at Cushman and Wakefield. He has served on the Board of Trustees of The Lindsay Museum since 1984. Mr. Moore has studied at the Commercial Investment Real Estate Institute and has lectured at the University of San Francisco and San Francisco State University. He received a B.A. in History from the University of California at Berkeley, an M.B.A. from the University of San Francisco and is currently working toward a Doctor of Business Administration at Golden Gate University. Robert E. Pester 39 Mr. Pester has been Vice President of Acquisitions 1994 of Bedford Acquisitions, Inc. since February 1994. Prior to joining Bedford Acquisitions, Inc., he was a real estate investment consultant from 1992 to 1993, President of the Development Division of BPHL from 1989 to 1992 and Vice President of Cushman & Wakefield in Northern California from 1980 to 1989. Mr. Pester received a B.S. in Economics and in Political Science from the University of California at Santa Barbara. Hanh Kihara 48 Ms. Kihara has been the Controller of the Company 1993 since May 1993. Prior to joining the Company she was Controller and Assistant Controller of BPHL from 1990 to 1993. From 1986 to 1990, Ms. Kihara was a Manager of Armstrong, Gilmour and Associates, a certified public accounting firm. Ms. Kihara has been a certified public accountant since 1989. Ms. Kihara received a B.S. in Administration and Accounting from California State University -- Hayward.
21 17 COMPENSATION OF NAMED EXECUTIVE OFFICERS The following table sets forth information regarding compensation paid by the Company for services rendered during the past three years for the four most highly compensated executive officers of the Company who were employed by the Company as of December 31, 1995 (collectively, the "Named Executive Officers"). No executive officer other than the Named Executive Officers earned more than $100,000 on an annualized basis in any year. The salary of the Vice President - Acquisitions was, as of December 31, 1994, paid by BPI Acquisitions, then a separate division of the Company which was funded by Mr. Bedford, and as of January 1, 1995 was paid by Bedford Acquisitions, Inc. See "Certain Relationships and Related Transactions -- Funding of Acquisition and Financing Costs." Prior to July 1992, the Company's affairs were managed by Kingswood Realty Advisors, Inc., and the Company had no salaried employees. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM ------------------- COMPENSATION ------------ SECURITIES UNDERLYING OPTIONS/SARS ------------ ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS SARS COMPENSATION(7) - --------------------------- ---- ------ ----- ------- ---- ------------ Management of Bedford Property Investors: Peter B. Bedford(1).......................... 1995 $150,000 $ 50,000 5,000(5) -0- $6,418 Chief Executive Officer 20,000(6) -0- 1994 $150,000 -0- 5,000(5) -0- $3,897 1993 $129,615 -0- 5,000(5) -0- $ 42 Donald A. Lorenz(2).......................... 1995 $150,000 $ 87,133 25,000(6) -0- $2,668 Executive Vice President and 1994 $ 25,000 -0- -0- -0- $ 38 Chief Financial Officer James R. Moore(3)............................ 1995 $ 50,000 -0- -0- -0- $ 41 Vice President Property/Asset Management Management of Bedford Acquisitions, Inc.: Robert E. Pester(4).......................... 1995 $150,000 $149,933 25,000(6) -0- $2,668 Vice President - Acquisitions 1994 $133,558 -0- 10,000(6) 5,000 $ 90
- ---------------------- (1) Mr. Bedford did not commence employment with the Company until February 1993. He began serving as a director of the Company in February 1991. (2) Mr. Lorenz did not commence full time employment with the Company until January 1, 1995. From September 1, 1994 to December 31, 1994 he was a part-time employee. 22 18 (3) Mr. Moore commenced employment with the Company on September 1, 1995. His annual salary is $150,000. (4) Mr. Pester commenced employment with the Company in February 1994. Commencing January 1, 1995, Mr. Pester was employed by Bedford Acquisitions, Inc. See "Certain Relationships and Related Transactions -- Funding of Acquisitions and Financing Costs." (5) Represents stock options granted pursuant to the 1992 Directors' Stock Option Plan. (6) Represents stock options granted pursuant to the Employee Stock Option Plan. (7) Includes auto allowance (in an aggregate amount of $6,900 for 1995, $3,800 for 1994 and $0 for 1993), premiums paid by the Company for term life insurance (in an aggregate amount of $395 for 1995, $225 for 1994 and $0 for 1993) and matching contributions under the Company's 401(k) Plan (in an aggregate amount of $4,500 for 1995). The Company's 401(k) Plan was implemented in 1995. OPTION GRANTS The following table sets forth certain information concerning options granted during 1995 to the Named Executive Officers.
OPTION GRANTS IN 1995 INDIVIDUAL GRANTS POTENTIAL REALIZABLE --------------------------------------------------- VALUE AT ASSUMED NUMBER OF PERCENT OF ANNUAL RATES OF STOCK SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR UNDERLYING GRANTED TO OPTION TERM OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------------- NAME GRANTED FISCAL YEAR PRICE DATE 5% 10% ---- ------- ------------- -------- ---------- -------- --------- Peter B. 5,000(1) N/A $11.816 3/13/2001 $ 16,320 $ 36,070 Bedford.......... 20,000(2) 23% $ 11.50 9/13/2005 $144,600 $366,600 Donald A. 25,000(3) 29% $ 11.50 9/13/2005 $180,750 $458,250 Lorenz........... James R. 0 0 -- -- $ 0 $ 0 Moore............ Robert E. 25,000(3) 29% $ 11.50 9/13/2005 $180,750 $458,250 Pester...........
(1) Stock Options granted pursuant to 1992 Directors Stock Option Plan, which options vest and become exercisable six months from the date of grant. (2) Stock Options granted pursuant to Employee Stock Option Plan, which options vest and become exercisable at a rate of 25% per year after the date of grant. (3) In September 1995, the Company established a Management Stock Acquisition program. Under the program, options exercised by key members of management within thirty days of the grant date may be exercised either in cash or with a note payable to 23 19 the Company. Mr. Lorenz and Mr. Pester both exercised their options granted in 1995 pursuant to this program. See "Certain Relationships and Related Transactions -- Indebtedness of Management." AGGREGATE OPTION EXERCISES IN 1995 AND VALUES AT YEAR-END 1995 The following table sets forth information regarding the number of shares acquired and value realized for options exercised by the Named Executive Officers during the year ended December 31, 1995 and the number and aggregate dollar value of unexercised options held at the end of 1995. AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTIONS/SAR VALUES
VALUE OF SECURITIES NUMBER OF SECURITIES UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY SHARES OPTIONS/SARS AT YEAR-END OPTIONS AT YEAR-END(1) ACQUIRED ON VALUE -------------------------------- --------------------------------- NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---- -------- -------- ----------- ------------- ----------- ------------- Peter B. Bedford......... -0- -0- 47,500 37,500 $676,854 $534,375 Donald A. Lorenz......... 25,000 $50,000 -0- -0- -0- -0- Robert E. Pester......... 25,000 -0- 5,000 10,000 $ 71,250 $142,500 James R. Moore........... -0- -0- -0- -0- -0- -0-
- ---------------------- (1) For all unexercised in-the-money options, assumes a fair market value at December 31, 1995 of $14.25 per share of Common Stock, which is the last transaction in the Common Stock on the New York Stock Exchange as of that date. EMPLOYMENT AGREEMENT WITH PETER B. BEDFORD On February 16, 1993, the Company entered into an employment agreement with Mr. Bedford, Chairman and Chief Executive Officer, and amended the agreement on September 18, 1995. Pursuant to the amended employment agreement, Mr. Bedford has agreed to serve as Chairman and Chief Executive Officer of the Company on a substantially full-time basis until the agreement's expiration on September 18, 2000. After September 18, 2000, the agreement will be automatically renewed for additional one-year terms unless either party gives the other notice of non-renewal. Under the employment agreement, the Company agrees to pay Mr. Bedford a salary of not less than $150,000 per annum, plus an automobile and parking allowance. The amended employment agreement provides for a severance payment to Mr. Bedford equal to one year's salary in the event that the Company terminates his employment without cause or Mr. Bedford resigns under specified circumstances, or due to a change in control of the Company. 24 20 BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Overview During 1995 the members of the Compensation Committee were Messrs. Downs, Frank and Zankel. Additionally, Mr. Eastman was appointed to the Compensation Committee at the December 12, 1995 Board meeting. The Compensation Committee is responsible for the general compensation policies of the Company, and in particular is responsible for setting and administering the policies that govern executive compensation. The Compensation Committee evaluates the performance of management and determines the compensation levels for all executive officers. The primary objectives of the Company's compensation policies and programs are (i) to attract and retain key executives, (ii) to reward performance by these executives which benefits the Stockholders, and (iii) to align the financial interests of the Company's executive officers directly with those of the Company's Stockholders. The primary elements of executive officer compensation are base salary, annual cash bonus, and stock option awards. The salary is based on factors such as related experience, level of responsibility, and comparison to similar positions in comparable companies. The annual cash bonuses are based on the Company's performance measured against attainment of financial and other objectives, and on individual performance. Stock option awards are intended to align the executive officer's interest with those of the Stockholders, and are determined based on the executive officer's level of responsibility, number of options previously granted, and contributions toward achieving the goals and objectives of the Company. Additional information on each of these compensation elements follows. Salaries Base salaries for the executive officers are adjusted annually, following a review by the Chairman and Chief Executive Officer (the "CEO") of the Company. In completing the review, performance of the individual with respect to specific objectives is evaluated, as are increases in responsibility and salaries for similar positions. Comparisons are made to the total compensation packages of other publicly traded real estate investment trusts of similar size, with a comparable number of properties and employees. These comparisons are completed through a review of various public filings as well as through a review of the results of the REIT Executive Compensation Survey sponsored by the National Association of Real Estate Investment Trusts (NAREIT). When all reviews are completed, the CEO makes a recommendation to the Compensation Committee for its review and final approval. With respect to the CEO, the Compensation Committee considers a number of factors in setting his compensation, the most important of which are the level of compensation paid to chief executive officers of other real estate investment trusts, the success of the Company's recent acquisitions of new properties, and his importance to the Company's efforts to raise capital in the public markets. The current base salary for Mr. Bedford, the Company's CEO, is less than the average for chief executive officers of similar real estate investment trusts. However, his total compensation is deemed appropriate in view of the stock options he holds and his significant equity ownership. 25 21 In light of the relatively low salaries of the Company's executive officers, the Compensation Committee has not developed a position regarding the Internal Revenue Code provision limiting deductions for salaries to $1 million per person. Annual Bonuses Annual bonuses are awarded on a discretionary basis and reflect both Company and individual performance. The Compensation Committee considers numerous qualitative and quantitative factors in determining these bonus awards, including the amount of equity capital raised, the success of the Company's acquisition program and the growth in the Company's funds from operations, after adjustment for lease commissions, tenant improvements and other capital expenditures. Stock Option Awards Stock options are an integral part of each executive officer's compensation and are utilized by the Company to provide an incentive to the officer, and to align the interests of the executive with those of the Stockholders by providing him with a financial interest in the Company. Options granted by the Compensation Committee under the Company's Employee Stock Option Plan are made at fair market value on the date of the grant, vest over various time periods of up to five years and expire after ten years. In making grants, the Compensation Committee takes into account the executive officer's contributions to the Company, scope of responsibilities, salary and the number of options previously granted. The executive officers were granted a significant number of options in 1995, as the Compensation Committee sought to implement its overall strategy of aligning the financial interests of the executive officers with those of the Stockholders. STOCK PRICE PERFORMANCE GRAPH The following line graph illustrates a five-year comparison of the cumulative total stockholder return on the Common Stock against the cumulative total return of the Standard & Poor's 500 Composite Stock Index and the SNL Securities Corporate Performance Index Value of all publicly-traded real estate investment trusts ("REITs") holding greater than a 75% equity interest in their REIT-qualifying assets. The graph assumes that $100 was invested on December 31, 1990 in the Common Stock and the indices, and that all dividends were reinvested throughout the period. STOCK PRICE PERFORMANCE EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC YEAR ENDING
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 ------------------------------------------------------------------------------ Bedford Property Investors 100.00 71.17 88.96 142.11 169.24 234.57 S&P 500 100.00 130.47 140.41 154.56 156.28 207.25 Equity REITs 100.00 137.08 159.33 190.53 197.26 228.59
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers, and any person who owns more than ten percent (10%) of a registered class of the Company's equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange Commission (the "SEC"). Such officers, directors and ten percent (10%) stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms that they file. 26 22 Based solely on its review of copies of such reports received or written representations from certain reporting persons, the Company believes that all Section 16(a) filing requirements applicable to its officers, directors and ten percent (10%) stockholders during the fiscal year ended December 31, 1995 were complied with. 27 23 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information as of March 31, 1996, with respect to directors, certain employees of the Company and each person who is known by the Company to own beneficially more than 5% of the shares of its Preferred Stock and its Common Stock, and with respect to shares of Common Stock owned beneficially by all directors and officers of the Company as a group.
NUMBER OF SHARES PERCENT OF TITLE OF CLASS NAME AND ADDRESS BENEFICIALLY OWNED CLASS - -------------- ---------------- ------------------ ----- Preferred Stock Bed Preferred No. 1 8,333,334 100% Limited Partnership 225 Franklin Street Boston, MA 02110-2803 Common Stock Peter B. Bedford 914,663(1) 29.5% Common Stock Anthony M. Downs 40,250(2) 1.3% Common Stock Anthony M. Frank 44,000(3) 1.4% Common Stock Claude M. Ballard 40,500(4) 1.3% Common Stock Martin I. Zankel 50,000(5) 1.6% Common Stock Thomas G. Eastman 25,000(6) (7) Common Stock Thomas H. Nolan, Jr. 25,000(8) (7) Common Stock Robert E. Pester 38,000(9) 1.2% Common Stock Donald A. Lorenz 25,850 (7) Common Stock Hanh Kihara 6,563(10) (7) Common Stock All directors and officers as a group 1,209,826(11) 36.4% (12 persons)
- ----------------------------- (1) Includes 150,000 shares owned by Mr. Bedford's children (as to which Mr. Bedford has sole voting power and may be deemed to be the beneficial owner) and 58,750 shares of Common Stock subject to options exercisable within 60 days of March 31, 1996. (2) Includes 40,000 shares subject to options exercisable within 60 days of March 31, 1996. (3) Includes 40,000 shares subject to options exercisable within 60 days of March 31, 1996. (4) Includes 40,000 shares subject to options exercisable within 60 days of March 31, 1996. (5) Includes 40,000 shares subject to options exercisable within 60 days of March 31, 1996. (6) Includes 25,000 shares subject to options exercisable within 60 days of March 31, 1996. (7) Less than 1%. (8) Includes 25,000 shares subject to options exercisable within 60 days of March 31, 1996. (9) Includes 6,250 shares subject to options exercisable within 60 days of March 31, 1996. 28 24 (10) Includes 5,563 shares subject to options exercisable within 60 days of March 31, 1996. (11) Includes options to purchase 280,563 shares which are currently exercisable or become exercisable within 60 days of March 31, 1996. 29 25 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS FUNDING OF ACQUISITION AND FINANCING COSTS Due to the Company's limited financial resources, its activities relating to the acquisition of new properties and debt and equity financings are currently performed by Bedford Acquisitions, Inc., ("Bedford Acquisitions"), a corporation wholly owned by Peter B. Bedford, the Company's Chairman and Chief Executive Officer, pursuant to a written contract dated January 1, 1995. The contract provides that Bedford Acquisitions is obligated to provide services to the Company with respect to the Company's acquisition and financing activities, and that Bedford Acquisitions is responsible for the payment of its expenses incurred in connection therewith. Such expenses include certain costs incurred by the Company on behalf of Bedford Acquisitions including the cost of officers and directors insurance coverage under the Company's insurance policy. Bedford Acquisitions must submit to the Company a direct cost estimate for the Company's approval relating to each acquisition or financing, setting forth the estimated timing and amount of all projected Bedford Acquisitions costs relating to the acquisition or financing. Pursuant to the contract, Mr. Bedford is obligated to make the payments of Bedford Acquisitions' expenses described above if Bedford Acquisitions fails to make any such payments in a timely fashion, provided that Mr. Bedford is not obligated to pay any such amounts exceeding $1 million or following a termination of Bedford Acquisitions' obligations based on the expiration or termination of the term of the contract. The contract provides that Bedford Acquisitions is to be paid a fee in an amount equal to the lesser of (i) 1 1/2% of the gross amount raised in financings or the aggregate purchase price of property acquisitions, or (ii) an amount equal to (a) the aggregate amount of approved expenses funded by Bedford Acquisitions through the time of such acquisition or financing minus (b) the aggregate amount of fees previously paid to Bedford Acquisitions pursuant to such arrangement. In no event will the aggregate amount of fees paid to Bedford Acquisitions exceed the aggregate amount of costs funded by Bedford Acquisitions. The agreement with Bedford Acquisitions has a term of one year, is renewable at the option of the Company for additional one year terms, and will expire no later than January 1, 1998. From February 1993 through December 1994, the Company's activities relating to debt and equity financings and the acquisition of new properties were handled under arrangements similar to the current arrangement with Bedford Acquisitions through BPI Acquisitions, a separate division within the Company. This division operated under an arrangement with Mr. Bedford whereby he provided acquisitions and financing personnel, allocable overhead costs and the costs of all due diligence conducted prior to an acquisition. Upon the completion of a financing or the acquisition of a property, Mr. Bedford was paid a fee by the Company substantially identical to that described above. In no event could the aggregate amount of fees paid to Mr. Bedford exceed the aggregate amount of costs funded by Mr. Bedford. As of December 31, 1995, the Company had paid Mr. Bedford and Bedford Acquisitions an aggregate of approximately $3,046,000 for acquisition and financing activities performed since February 1993 pursuant to the foregoing arrangements which was approximately $375,000 less than 1.5% of the gross amount raised in completed financings and the aggregate purchase price of acquired properties. Of this amount, approximately $2,143,000 was paid during 1995. The Company believes that since the fees charged under the foregoing arrangements (i) have been and continue to be comparable to those 30 26 charged by other sponsors of real estate investment entities or other third party service providers and (ii) have been and continue to be charged only for services on acquired properties or completed financings, such fees were and continue to be properly includable in direct acquisition costs and capitalized as part of the asset or financing activities. If the Company were to discontinue this arrangement, its acquisition and financing activities would have to be paid by the Company, as incurred, out of cash from operations or borrowings and certain of such costs would be reflected as operating expenses in its statement of operations rather than being capitalized. For example, without the above-described arrangements with Mr. Bedford and Bedford Acquisitions, the Company may have incurred substantial operating expenses relating to acquisition and financing activities; if the Company had employed the same personnel and incurred the same expenses as Bedford Acquisitions, net income and Funds from Operations for the year ended December 31, 1995 each would have been reduced by approximately $600,000 (or $.14 per common and common equivalent share) compared to the corresponding amounts actually reported for that period. The Company intends to discontinue this fee arrangement if and when its operating results permit it to sustain acquisition and financing activities internally. However, the termination of this arrangement prior to that time would likely require the Company to decrease its acquisition and financing efforts, which could have a material adverse effect on the Company's ability to grow. RECENT ACQUISITIONS WITH AFFILIATES In October 1995, the Company completed the acquisition of 6600 College Boulevard, a single-story office building consisting of approximately 79,316 rentable square feet in Overland Park, Kansas. The building was acquired from AEW #25 Trust for $6.4 million. AEW #25 Trust is an affiliate of Bed Preferred No. 1 Limited Partnership ("BPLP"), which purchased 8,333,334 shares of the Preferred Stock for $50 million in September 1995. Thomas G. Eastman and Thomas H. Nolan, Jr., the directors of the Company who are affiliated with BPLP, had no role on behalf of the Company in this acquisition. In December 1995, the Company acquired the Landsing Pacific Portfolio, which comprised substantially all of the real estate assets of the Landsing Pacific Fund, Inc., a publicly-traded REIT based in San Mateo, California. The Company paid approximately $49.7 million for the Landsing Pacific Portfolio. At all times relevant to the transaction, Martin I. Zankel, a director and stockholder of the Company, was Chairman of the Board of Directors, Chief Executive Officer and President of the Landsing Pacific Fund, Inc. Mr. Zankel had no role on behalf of the Company in this acquisition and was excused from all Board deliberations regarding this matter. OTHER TRANSACTIONS 31 27 On June 8, 1994, Kingswood Realty Advisors, Inc. ("Kingswood") filed a petition in the United States Bankruptcy Court for the Northern District of California for protection from its creditors under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). On September 8, 1994, Kingswood converted its case to an action under Chapter 7 of the Bankruptcy Code. Kingswood's case was closed and a final decree entered by the Court on February 2,1, 1996. Mr. Bedford was president, director and sole shareholder of Kingswood. Martin I. Zankel, a member of the Board of Directors of the Company, and his associates provide legal services to the Company for which his firm was paid, in the aggregate, $52,000 in 1995. INDEBTEDNESS OF MANAGEMENT In September 1995, the Company established a Management Stock Acquisition program. Under the program, options exercised by key numbers of management within thirty days of the grant date may be exercised either in cash or with a note payable to the Company. Such note bears interest at 7.5% or the Applicable Federal Rate as defined by the Internal Revenue Service, whichever is higher. The note is due in five years or within ninety days from termination of employment, with interest payable quarterly. During 1995, Mr. Lorenz and Mr. Pester, both executive officers of the Company, each exercised options for 25,000 shares of Common Stock in exchange for notes payable to the Company. The notes, of $287,500 each, bear interest at 7.5% per annum. As of March 31, 1996, $254,593.18 and $196,308.44 in principal amount were outstanding under the notes owed by Mr. Lorenz and Mr. Pester, respectively. 32 28 OTHER INFORMATION A copy of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1995, may be obtained, without charge, by writing to Jennifer I. Mori, Secretary, Bedford Property Investors, Inc., 270 Lafayette Circle, Lafayette, CA 94549. OTHER MATTERS The Board of Directors knows of no matter to be presented at the Annual Meeting other than those set forth in the Notice of Meeting and described in this Proxy Statement. If, however, any other business should properly come before the meeting, it is the intention of the persons named in the accompanying proxy to vote in accordance with their best judgment on such matters. 33 29 STOCKHOLDER PROPOSALS Proposals of Stockholders intended to be presented at the annual meeting of Stockholders to be held in 1997 must be received by the Company at its principal executive offices no later than March 17, 1997 for inclusion in the Company's Proxy Statement and form of proxy relating to that meeting. Such proposals must meet the requirements of the rules of the Securities and Exchange Commission relating to stockholder proposals. By Order of the Board of Directors, April __, 1996 ___________________________________ Jennifer I. Mori Secretary 34 PRELIMINARY COPY (THIS PROXY IS TO BE USED BY COMMON STOCKHOLDERS ONLY) BEDFORD PROPERTY INVESTORS, INC. PROXY FOR 1996 ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED BY MANAGEMENT The undersigned stockholder of Bedford Property Investors, Inc., a Maryland corporation (the "Company"), hereby appoints Jennifer I. Mori and Donald A. Lorenz, and each of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the 1996 Annual Meeting of Stockholders of the Company to be held on Thursday, May 16, 1996 at 1:00 p.m. at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette, California, and at any adjournment(s) or postponement(s) thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting, with the same effect as if the undersigned were present. The undersigned hereby revokes any proxy previously given with respect to such shares. 1. Election of Common Stock Directors Nominees: Claude M. Ballard; Peter B. Bedford; Anthony M. Downs; Anthony M. Frank; Martin I. Zankel. / / FOR / / AGAINST / / ABSTAIN For all (Except Nominee(s) written below.) - - - - - - - - - - - - - - - - - - - - - 2. Approval of the Amendment to the Company's 1992 Directors' Stock Option Plan to increase the number of shares reserved for issuance thereunder from 250,000 to 500,000 and change the maximum expiration date of options granted thereunder from five to ten years. / / FOR / / AGAINST / / ABSTAIN 3. Ratification of appointment by the Company's Board of Directors of KPMG Peat Marwick LLP to serve as Company's independent auditors for fiscal year ended December 31, 1996. / / FOR / / AGAINST / / ABSTAIN The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF. / / MARK HERE IF YOU PLAN TO ATTEND THE MEETING Please sign exactly as name appears hereon and date. If the shares are held jointly, each holder should sign. When signing as an attorney, executor, administrator, trustee, guardian or as an officer signing for a corporation, please give full title under signature. Dated ______________________________, 1996 _______________________________________________________ Signature _______________________________________________________ Signature, if held jointly Votes must be indicated by filling in X in Black or Blue ink. Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. 35 PRELIMINARY COPY (THIS PROXY IS TO BE USED BY PREFERRED STOCKHOLDERS ONLY) BEDFORD PROPERTY INVESTORS, INC. PROXY FOR 1996 ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED BY MANAGEMENT The undersigned stockholder of Bedford Property Investors, Inc., a Maryland corporation (the "Company"), hereby appoints Jennifer I. Mori and Donald A. Lorenz, and each of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the 1996 Annual Meeting of Stockholders of the Company to be held on Thursday, May 16, 1996 at 1:00 p.m. at the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette, California, and at any adjournment(s) or postponement(s) thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting, with the same effect as if the undersigned were present. The undersigned hereby revokes any proxy previously given with respect to such shares. 1. Election of Preferred Stock Directors Nominees: Thomas G. Eastman; Thomas H. Nolan, Jr. / / FOR / / AGAINST / / ABSTAIN For both (Except Nominee written below) - - - - - - - - - - - - - - - - - - - - - The undersigned acknowledges receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF. / / MARK HERE IF YOU PLAN TO ATTEND THE MEETING Please sign exactly as name appears hereon and date. If the shares are held jointly, each holder should sign. When signing as an attorney, executor, administrator, trustee, guardian or as an officer signing for a corporation, please give full title under signature. Dated ______________________________, 1996 _______________________________________________________ Signature _______________________________________________________ Signature, if held jointly Votes must be indicated by filling in X in Black or Blue ink. Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope. -----END PRIVACY-ENHANCED MESSAGE-----